Up on UPS

Chris Johnson is managing quantitative analyst for Schaeffer's
Investment Research.
He oversees a team of analysts for the firm's trading department.
Here, he applies his expertise in quantified sentiment and the firm's
proprietary Expectational Analysis, to select his top pick for 2004,
United Parcel Services.

"After successfully
integrating itself into retail shipping, United Parcel Service
(UPS NYSE) roars into 2004 with the announcement of
large capital expenditures on aircraft and other equipment to continue building
the fundamentals of their business.
This, as they continue to grab market share from main competitor FedEx. With improvements to the company’s fundamentals
under way, the share price of UPS has also taken off as the stock recently broke
through its long-time resistance at $65.The stock now trades
well above its key long-term moving averages signaling healthy technical
activity for the shipping giant."

"Nonetheless, investors continue to
show cautious and even pessimistic outlooks for the company as a number of
Schaeffer’s sentiment gauges reflect.Currently, the Schaeffer’s Open Interest Ratio for UPS falls above 1.0,
meaning that there are more puts open on the company than there are calls.This number ranks in the top one percent
for the year, meaning that option investors have not displayed this much
skepticism towards UPS in the last year.Another gauge of
sentiment, the short interest ratio for the company, currently weighs in at a
hefty reading of 9.8, indicating that short sellers have been very active on the
stock and that the potential for a short covering rally exists. Overall, this
combination of positive fundamentals, positive price activity and negative
sentiment fits the bill for a stock poised to outperform according to our
Expectational Analysis approach."